Revisiting Your Employee Benefits & Group Retirement Programs

Welcome to Risky Business, commercial insurance with Butler Byers, and joining me today, Colin Rooke, the commercial risk reduction specialist with Butler Byers. We’re going to revisit the COVID file just a little bit. We’re going to talk about it from the angle of benefits. Joining us to talk about that is Ryan Warner, who’s the benefits specialist with Butler Byers and no stranger to this program. Colin, maybe we’ll just start with you and you can set the stage for us. You’ve decided that we should be talking a little bit about the benefits side of the equation today. What led you to that? Is it just the fact that we’re making progress through this COVID reopening and employers are finding themselves in new territory pretty much every day?

Yeah, that’s exactly it. I just wanted to bring Ryan on and talk about; what have we been doing the last four months and just even share some insights to other employers of what they could do or what they should look at. I wanted to share some success stories, again, of what we’ve been able to accomplish behind the scenes and just in the spirit of giving advice moving forward. This is not designed to be a COVID doom and gloom program, like some of the previous ones. Just more along the lines of what you can do, what’s been working. What are the insurance companies, or the carriers, what are they doing behind the scenes to help. Again, just talk a little more about what could be available to businesses with employee benefits and group retirement.

All right. Well, let’s pick it up from there. I’m assuming, if there is anything that is accepted and standard in this whole COVID thing, it’s that it’s a time of change. I’m assuming that the industry you guys operate in is no different than all the others that are out there. People are finding new approaches to things. They’re looking at things differently. Ryan I’ll maybe just get you to jump in here. You bring an interesting perspective to this, because you kind of have a handle as well on the national… You have a sense of what’s going on across the country and how Saskatchewan measures up against that, but what are you seeing? Are you seeing employers say, “Holy smokes. It’s head down and keep your eyes closed and hope you don’t hit something.”, or is it, “No, let’s take a look at the whole scenery here and see if we can make some changes and how do we adjust and cope and realign ourselves in light of the COVID pandemic.”?

Well, I think naturally you’re going to read across different industries. You’re going to see a wide range of impact. Fortunately, I would say a lot of business that we deal with have really ramped right back up and frankly, they’ve gotten to a point where majority, if not all of their staff, pre-pandemic have been brought back to work. Thankfully it seems like most employers, on some level, are just about back to full capacity staff-wise or at least within range of being able to get there. That’s been fantastic to see, and as they continue to pivot to adjust their own businesses, obviously we’re doing the same on our end.

Well, I would think that, perhaps the industries that have been hit the hardest through this thing, travel and transportation, so airlines. Those kinds of guys, but also for mom-and-pop shops. It’s been restaurants, food service, hospitality. They’ve really taken it on the chin and now we’re starting to see it reopened. They’re getting a chance to find their footing again, and those that are going to reopen will probably be back pretty close to, as you said, full capacity. Is that what you’ve been observing?

Yeah, definitely. It’s challenging, I think, for everybody though. The whole experience has just been wild with rare exceptions. But that said, certainly the smaller business side of things. Obviously they’re feeling a hefty burden on this and benefits, if they’re in a position to be able to offer them in the first place, is a challenging expense to maintain. For the bigger companies, they’ve had to be more strategic with how they structure things and have maybe had to tweak things over the last few months. Fortunately as Colin mentioned at the beginning, insurers have stepped up and have been able to offer some assistance. It’s been blanketed support for all size organizations.

It’s interesting. I was just looking at some numbers on how we’re seeing this reopening come along. The StatsCan numbers usually run six weeks or eight weeks behind, so we’re getting the May figures as we record this. But I just saw the food and beverage sector numbers and Holy smokes. From January, February, the Saskatchewan sales were around 160 million a month. By April, that was 79. They had more than half cut, so only half that. But May already saw a fairly big bounce back. North of a hundred million in sales. We’re a long ways from getting back to what we would call normal, but we’re stepping up in that direction. I think that dovetails well with what your observation is, that employers are starting to recall their workers and getting them back as close as they can to back in the job and back to normal.

Yeah, that’s exactly it. It’s nice to see employers… Like I said, they’re pivoting. They’re doing what they have to. Their people are vital to the operation of their businesses as it is. If they’re not at full capacity, it definitely seems like the majority are doing what they can to bring people back in some fashion. Might not be full time out of the gates, but they’re doing what they can to help.

Yeah. The numbers are trailing a little bit, so probably that hundred million, I just said, is likely closer to 130 or something now. But you wouldn’t think that with a 40% reduction, employers would call everybody back. They wouldn’t be able to do it, but as I say, keep in mind that those numbers are lagging a little bit. Colin, you’ve been listening to this conversation. Do you have a… Does this tweak anything for you? Does it spark a comment?

Yeah. I was thinking about what you said earlier, Ryan, with the carriers or insurers coming together. Maybe you can elaborate a little more on what you’ve seen. Coming from the property casualty side, for example, auto insurers have said, “Well, I think we could provide a break on premiums due to the fact, largely, these fleets have been sitting idle”. I can imagine, and I’m not trying to speak for you, but if there’s less activity, are they saying, “Okay. Well, there’s less risk of X, so maybe we can provide break here.” Have you seen a lot of that? And then, if there are… From what you’ve seen the insurance carriers do, how long do you think that’ll last? Is it going to be a short lived thing? Is it going to be the rest of 2020, maybe? Just curious about your thoughts.

Yeah. The response has been fantastic in my opinion. The insurers certainly weren’t obligated to do anything, but they wanted to help their clients out as much as we did. They just about unanimously stepped up and offered credits for various components of plans. Meaning it was fairly tailored to specific plans that were fully insured, which we can maybe talk about another time. The most clients are on that structure, and they were receiving in the neighborhood of 50% reductions on premium and dental. Naturally health expenses were continuing. People that needed medications were still getting their medications. Some areas weren’t impacted quite as heavily, but dental offices were essentially shut down. Your paramedical providers, your massage, physio, chiro, et cetera, they were pretty much shut down as well. There were some pretty healthy discounts to be had on the health side of premiums as well. It was really great to see how the insurance companies came forward to step up and offer that.

On the one hand I say that, but on the second hand, it’s clear that the claiming activity drops dramatically. I think the second part of your question there is; there’s still a lot of unknown as to what’s coming in front of us. As all these new parameters are put in place for practitioners and dentists and what they have to accommodate and their added costs. There’s a lot of speculation that the cost of these services could even go up for the near future. They’re not going to be able to work full hours, that they were pre-pandemic. Frankly again, I expect that they’re going to have to do something to try to one, make it affordable for their clients, but also to recoup some of their expenses as well. The credit system is still in place for a good chunk of providers, but it’s dwindling. They’re not going to provide that forever.

That’s an interesting insight. I want to pick that up in just a moment. We’ve got to take a little break. We’re going to just check out for two minutes here and then we’re going to come back and, and we’ll pick that up, because I’m intrigued by the line that you’re seeing here. Because normally you would think, Oh. Big, bad insurance company, no heart.”. All of a sudden they’re saying, “No. We’re being quite accommodating.”, and I want to explore that a little bit.

You’re listening to Risky Business, commercial insurance with Butler Byers. We’re going to take a little break. Back after this.

Welcome back to Risky Business, commercial insurance with Butler Byers. This is Paul Martin, the business commentator on see CKOM, and joining me, Colin Rooke. The commercial risk reduction specialist with Butler Byers and Ryan Warner, who is the benefits expert with the firm. Just before the break, we were talking a little bit about how insurance companies were quite accommodating through this COVID period. Where, if employers… They would look at the benefits plans and say, “Hey, you can’t go to the dentist, so we’re not going to charge you as much for the premium for dental coverage.”. That kind of stuff. That’s interesting that they could be that flexible through this period. That surprise you?

I would say nothing surprises me at this point. Things were evolving almost daily as COVID unfolded. I wasn’t really sure how this was all going to shake out. I wasn’t sure if all insurers were going to jump on board, but it seemed, like I said, pretty much unanimous. Heard across the board that they all stepped up to do something and it was pretty comparable with all providers. It was great to see. 50% reduction on dental, for example, that’s a healthy discount. On the other hand, we were seeing claims activity drop by 95%. There was essentially no activity in the claims side. They’re not seeing the expenditures go out the back door either. I think that they were in a position to step up and do something. Frankly, I didn’t anticipate they would go quite that far. I wasn’t sure how far, but I was surprised at 50%. The reason I say that is, that speculation. Clearly we didn’t know and still don’t know for sure how much of a flux in claims activity we’re going to see come back as these firms or service providers start opening up again.

They’ve got to charge something in order to cover the cost of claims when they start flooding back in. Naturally, what they’ve done is head over heels, beneficial for the clients. That’s for sure.

You made a… Sorry. You made a good point though, Ryan. Something that I hadn’t considered that, yeah it is nice to say… I’m not trying to knock any of the insurers, but it’s nice to say that they all stepped up and gave discounts, but you’re right. If there’s no claims activity, they almost have a responsibility to do something. Thinking about the auto comment I made before the break. Again, you’re right. It’s easy to praise them saying, “Well, they’ve come to the table to help out the industry.”, but if the cars aren’t going anywhere, they’re certainly not going to bounce off other cars or other people or other buildings. So on some level there’s a responsibility there to say, “We’re collecting an awful lot of premium on vehicles or around dental, for example, that really can’t be used.”. Anyway, it’s just a good point that made me think that, in some ways they’re almost forced into it.

Yeah. That’s absolutely the case. It’s the old catch 22. They’re mostly profit companies and they do just fine. Naturally the reality of what they’ve done I think is they’re responsibility to do it, but I think that they’ve done a great job in how they’ve handled it. I’ll also add, the renewals that I’ve seen over the last couple of months have been very reasonable as well. Essentially all the insurers are doing what they can to continue to help in that regard as well.

I can’t help but notice. Colin, you used the term, “When the fleets are all parked, that there are no cars bouncing off each other.”, and it just made me think. Maybe this was a preview of what autonomous driving is going to look like when there’s no human error factor to be taken into this. That cars won’t bump into each other nearly as often. Maybe this is what the future looks like. Not that they’re idle, but that they’re not colliding.

I had an auto claim earlier this week and for a moment, I wasn’t sure what to do, because it’s been a while.

Ryan, I just want to… I’ll ask you from the perspective of an insurance company now and the relationship with their customers, commercial employers primarily. Given the way that the claims experience changed, just the whole experience changed, is this an opportunity for employers to say to insurance companies, “Let’s rethink the whole premium package.”? Is this a repricing opportunity right now?

From the insurance companies perspectives, I think, I’ve made the comment a couple of times, I think they’re still having this whole thing unfold in front of them. I think there’s a lot of exploration going on. Certainly the way they’re doing business and things that are outside the benefit space, but their real estate footprints and their head counts and where their people are working from. All of this is changing our entire landscape. All of that will have an impact down the line. I don’t think it’s going to be something we’re going to hear about tomorrow, but it will certainly have an impact.

The employer side of things, they’re all revisiting the benefits in general and trying to figure out different ways to be more intelligent about the premium. How do they protect their staff? How do they protect the sustainability of the plans? And that’s really, that’s where we come in and can help them with cost sustainability measures and risk prevention and so on. I would say in a positive way, it has really opened the door for dialogue that we’ve been trying to have with clients for the last number of years. But it’s much more on the forefront now.

Well, there’s the saying that I’m quite fond of, which is; a crisis is a terrible thing to waste that. It’s an opportunity to reset, to reposition. Your comment that we’ve been trying to have these conversations with employers, they’re too busy or whatever. It just wasn’t enough of a pain point for them to pick it up. Maybe now they will see this as an opportunity. I’m guessing you would encourage employers to talk to their insurance brokers and say, “Hey, how do we rethink the world today in light of now we’re starting to do the recovery?”?

A hundred percent. I couldn’t agree with that comment more, because we’re on the front lines. We’re always looking at the nuances and what are the trends in the industry? It’s not just about selling them on, add this product. It is so much more about building a plan and evolving their plan with their business, which can be completely different to their neighbor next door. We’re here to help them and keep them apprised of what’s going on and how we can help their plan, and ultimately their employees.

Listen, we’ve got just one minute left here before we have to wind this up. I’m just going to toss this out, and I didn’t brief you on this question before, so it’ll catch you by surprise. I just, I can’t help but notice the difference in the way this is unfolding between Canada and the US. You operate in Canada, but do you have observations on what’s going on in the States and are there implications in Canada? Especially for employers who might operate both sides of the border?

Yeah. We have a fair amount of exposure, actually, to US parent companies that have their operations in Canada and we handle their Canadian benefits. I’m loosely exposed to the US benefits themselves, but certainly at the decision making level… The executives, with all of our resources, seem to be frankly in a bit of panic mode. They’re, day by day, slashing and cutting. Doing whatever they need to do to make things work. I would say that seems to be the bigger organizations. The smaller ones seem to be a little bit more consistent, but in terms of their Canadian operations, they’re just not familiar with our language. We’re both speaking English, but it’s dramatically different.

Yeah. Different governance rules.

Yeah.